More Institutional Investment in the PRS

The new Housing Minister Gavin Barwell MP has backed more institutional investment in the UK’s Private Rental Sector (PRS), giving his first major speech at the RESI 2016 conference in Newport, South Wales.

The Minister used his speech at the conference to set out his main thrust of policy, away from a recent focus purely on encouraging home ownership at the expense of renting, to one which favours neither:

“We need to build more homes of every single type and not focus on one single tenure.”

The Government’s Starter Homes policy, introduced under George Osborne, was to offer homes to first time buyers, sold at a discounted of 20%. However, it seems that Mr Barwell favours moving away from this, explaining that previous policies, which encourage home ownership and increase the level of demand, could affect the amount of homes built to rent.

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This change in policy could involve abandoning the government’s pledge to build 200,000 Starter Homes by 2020, but providing more affordable rental homes.

“There’s a little bit of a tension between the overall supply objective and measures specifically to help people onto the housing ladder.”

“The way you make housing in this country more affordable to rent and buy is you build more homes. There is still a role for the Government doing specific things to help people onto the first rung, but this can’t be at the exclusion of all else.”

“A growing number of families and young professionals are choosing the [private rental sector], and while homeownership is still the goal for the majority, many will rent for some years before they buy.

“I’m very clear that our ambitions will never be achieved without a significant boost in institutional investment to the [PRS], to ensure more choice and quality for people living in rented accommodation.”

“Recent growth in the bespoke rental market has been impressive, but this progress must be expanded.”

When Adam Challis, the Head of Residential Research at JLL, spoke, he said:

“This is welcome news, as it signals this Government’s desire to support housing across all tenures.

“The private rented sector is the fastest growing tenure, but had been overlooked under old policy. This is the first step in putting that right.”

It is still not clear how the Minister’s approach will help the small-scale PRS landlord, but the indications are that he will support them as well as the large-scale institutional ones.